There appear to be two different views when it comes to the outlook on China: In Thursday's Australia Financial Review Louis-Vincent Gave of Hong Kong's GaveKal Dragonomics outlined why he describes himself as a "massive China bull". The article went on to explain that Gave believes the global investment community is underexposed to Chinese stocks and bonds, and as a result will be compelled to increase its exposure over the coming 3 years as Chinese financial assets begin to be included more fully in the global benchmarks that passive, and many active institutional investors track.
That certainly could occur, and one should never ignore markets which rise on the back of the pure weight of money which either has to invest, or can find little reason not to. For an example of the latter, just consider the recent bull run in Australian bank and high yielding shares. However it doesn't necessarily mean that the fundamentals of the underlying Chinese economy, or the companies operating there are investment grade or secure.
Taking the other view is this article entitled China is Choking on its Own Debt which drew attention to the release earlier this month of the People's Bank of China's (PBoC) first quarter Monetary Policy Report. The report somewhat alarming given the authoritative source, in that it points out that:
If all of that is alarming in itself, so is the reason that the report received so little media exposure: Given that the conclusions are not new for most avid watchers of China the fact that it has yet to be published in an English language version perhaps suggests why didn't hit the headlines, most probably because the Chinese government didn't want it to.
As the article points out the PBoC website has somewhat of a history of being less than transparent when it comes to posting English language versions of articles, citing April as an example when 32 stories were posted in Chinese while only 12 made it to the English version. There are many conspiracy theorists who believe that the level of influence exerted by the Chinese government on economic statistics are, not to put it too mildly, relatively well controlled.
Which of the two opinions play out in the future remained to be seen, and to be fair the Chinese authorities' manipulative attitudehas been known to work in the long run. However a combination of the above, and anecdotal evidence of massive margin lending at street level as well as corporate, will keep the risk factor high.
Specific results received this week include the following LATEST PERFORMANCE UPDATES:
Bennelong Long Short Equity Fund performance in April was flat (0.03%), however long term performance remains sound with since inception (Jan 2003) returns of 17.33% pa (Index 8.56%) and a volatility of 11.79% (Index 12.86%).
The Pengana Absolute Return Asia Fund had a strong performance of 3.87% for the month of April, bringing the annualised return since inception to 11.43%.
Allard Investment Fund increased 1.50% during the month of April, to bring the Fund's last twelve month performance to 27.08%.
FUND REVIEWS released this week: Monash Absolute Investment Fund; Optimal Australia Absolute Trust; and Bennelong Kardinia Absolute Return Fund.
25-27 May 2015 - Digital Marketing for Banking and Financial Services Summit
15 September 2015 - AIMA Australia Hedge Fund Forum 2015
And Now for Something Completely Different: A few weeks ago we presented a link which allowed you to find out what song was the number one hit on the day when you were born. On the same tack (but completely different!) is this link which allows you to review what was hitting the headlines around the world on the day you were conceived! I have to admit to checking my own parents out, and came to the conclusion that there was strong possibility that I was conceived because they were simply bored. So I checked using my wife's birth date and got a very different result - which in the interests of discretion (and marital harmony) I won't reveal.
However I hope you enjoy your journey of discovery.
And on that note, enjoy the week-end.Kind regards,
Chris
CEO
Connect with me on LinkedIn and Twitter
|
Registration to AFM is free and provides general information and performance data on Absolute Return, Hedge Funds and Alternative Investments. |
Fund Managers and paid Subscribers have access to details on Individual Managers and Funds, with historical results, key performance indicators, latest news and performance reports. |
Prism Select provides self-directed investors and their advisors with factual information, performance data and opportunity to apply for funds online using OLIVIA123. |
Tune into Foxtel's Sky Business every Monday at 2:15pm for AFM's weekly comment. |
Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.
